Seniors aged 62 and older can obtain a reverse mortgage, which is a mortgage that is the opposite of the traditional mortgage. Instead of you making payments to pay off a home loan, the equity in your home pays you in payments. This is ideal when you want to have extra cash flow. But what happens during the process is you begin to accumulate a balance that you will owe on the home. This balance is due when you pass away, sell, or move out of the home. For some, it is ideal to payoff a reverse mortgage early.
How to payoff a reverse mortgage early
Not everyone has the cash flow to payoff a reverse mortgage early. One way and the most common way to achieve this is to sell the home and take the money from the sale to pay off the reverse mortgage. There may be no prepayment penalties when you take this route.
Take into consideration, though, that there are few times when it may be beneficial to pay the balance of a reverse mortgage off early. This is mainly because the mortgage company is paying you monthly rather than you paying them. However, one reason why you may wish to payoff a reverse mortgage early is if you do not have enough insurance money to pay off the amount you have been paid, especially if your family will not be selling the home or cannot sell it.
Another reason to not pay off early may be that your family may not be able to sell the home to satisfy the amount borrowed if other family members are living within it. You may also wish for the inheritance of your family to be larger, so you may decide to do that by paying the reverse mortgage off early. Another type of mortgage is physician loan. What is a physician loan? Check this out.
Should you payoff your reverse mortgage early?
Whether or not you payoff a reverse mortgage early depends upon your specific situation. If you are worried about your family being responsible for the bill, then you may wish to start repaying the money now, otherwise you can receive payments for the rest of your life. Keep in mind that the amount to be paid back will never exceed the value of your home even if you are paid more than that value.